After UAE and Kuwait, Bahrain cuts interest rates

October 9th, 2008 - 4:24 pm ICT by IANS  

Dubai, Oct 9 (IANS) Bahrain’s central bank Thursday cut its key policy interest rate by 25 basis points as Gulf markets went on a freefall in the face of the global financial crisis.The Central Bank of Bahrain (CBB) said in a statement that the rate on its one-week deposit facility now stands at 1.75 percent from the previous 2 percent.

The decision comes in the wake of similar moves by the central banks of the United Arab Emirates (UAE) and Kuwait.

The Central Bank of Kuwait cut interest rates by 125 basis points, bringing the benchmark discount rate down to 4.5 percent from 5.75 percent and the repo rate to 2.5 percent from 3.5 percent.

The UAE Central Bank followed suit late Wednesday, after the markets closed, cutting the lending rates to banks from 5 percent to 3 percent.

The bank also slashed its repo rate from 2 percent to 1 percent with effect from Wednesday.

In its statement, CBB also said it cut the rate on the overnight deposit facility to 1.25 percent from the previous 1.5 percent.

The repo and lending rate has been cut to 4.75 percent from 5.25 percent.

Though hit just as any other bourse in the Gulf, Bahrain’s stock exchange is among the least affected by the current mayhem in the markets.

The Bahrain All Share Index closed Wednesday at 2,319.98 points, down 64.35 points from the previous day’s close.

At a meeting with King Hamad Bin Isa Al Khalifa Wednesday, Prime Minister Shaikh Khalifa Bin Salman Al Khalifa said Bahrain’s economy was safe from the global financial crisis because of the “sound and clear financial and economic policies adopted by the government over the past decades”.

He stressed on the key role the government was playing and the support it extended to the financial sector.

Shaikh Khalifa said that all banking establishments in that Gulf nation were stable.

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